Tuesday, December 29, 2009

Where Is My Bailout?

One Year After

Rewind to Inauguration Day in January. President-elect Obama ushered in a new administration with much fanfare and hope for C-H-A-N-G-E. Now 12 months later, it's business as usual.

We have a problem with that! Enormous bonus payouts for executives. Toxic, dangerous assets that remain on banks' balance sheets. The same executives running firms they took to the brink with risky investment choices. The "too big to fail" institutions took the global economy to the precipice -- but were saved with hefty rescue packages thanks to American taxpayers -- are now bigger than ever.

As summarized by Howard Davidowitz, "I have a problem with that!" So do many Americans as populist outrage rises.

In fact, it's anything but business as usual for American workers who are grappling with 10% unemployment -- the highest level in 26 years -- and no guarantee the economic bottom is in place for 2010.

While the $787 billion stimulus package has yet to filter down to local communities, it's no wonder Americans are asking: "Where's MY bailout?"

Empire falling? Detroit is a city under siege. While Ford avoided bankruptcy, sales are down sharply. Chrysler was strong-armed into an alliance with Italy's Fiat. The government ousted GM's CEO Rick Wagoner. With nagging questions about America's competitiveness and debts mounting, it's no wonder historians like Niall Ferguson of Harvard University are contemplating the rise and fall of empires.

"If you're trying to borrow $9 trillion to bail out your financial system and your economy, and already half your public debt is owned by foreigners, it's not really the conduct of a rising empire is it?" Ferguson asks.

Stock mark rising. Sure the market has staged a phenomenal recovery off the March bottom, the lowest levels since 1997. The Dow today is firmly above 10,000. But among the bulls and bears, the debate continues on the recession's definitive end. What the recovery will look like from here -- V-shaped, W, square root? Take your pick from the alphabet, recovery soup.

But as Columbia University professor and economist Joseph Stiglitz points out, for most Americans the question is: "Can they get a job?" The likelihood of a big improvement on that front anytime soon is "very remote," Stiglitz says.